Texas Reverse Mortgage for Senior Citizens

When retirement has left you wanting, and you are basically living on a shoestring budget, you may want to consider a Texas reverse mortgage for senior citizens. The option could give you the money needed to live out your final years in comfort, rather than poverty. However, before signing on the dotted line, you need to know exactly how reverse mortgages work, how to qualify, how it will affect your heirs, and what happens if you outlive the equity in your home.

Reverse mortgages are so-named because they are opposite of the traditional loan you took out on your home years ago.  With a traditional mortgage, you own more in the beginning and have little equity in your home.  As you continue to pay off the loan, your debt decreases as your equity increases.

Conversely, a reverse mortgage for senior homeowners depletes the equity in your home over time, and you owe more money when the loan is terminated.   The process is called reverse equity. However, if you qualify for a reverse mortgage, you will not need to worry about the money being repaid until you die or have to move out of your residence.

In order to qualify for a reverse mortgage in Texas, you and your spouse, if you are married, need to be at least 62 years old or older.  You must own/live in the home, and it must be well-maintained.  First, the older you are the better the reverse mortgage will work for you.  Since your payments are based upon the equity in your home and your projected longevity, the monthly checks will be larger.

Unfortunately, once the loan is set, if you choose the monthly payment plan, your checks will not go up with the rising cost of living.  However, since many senior citizens are already living on a fixed income, a reverse mortgage can make the final years more comfortable. As long as you check out all your options and choose the lender with care, it can be a win-win situation for both the senior citizen and the reverse mortgage lender.

However, the home equity conversion mortgage is the only one that is insured by the Federal Government through the FHA (Federal Housing Administration). HECM limits your loan costs and makes sure that your lender meets their obligations. Basically, it is to help make sure that you get the most out of your reverse mortgage, and the lender cannot take advantage of your situation and charge excessive fees that are part of the total loan amount against the home.

If you are interested in a HECM reverse mortgage, you also need to know how it will affect your heirs. When you pass away, or have to relocate to an assisted living facility, your heirs have the opportunity to pay off the loan and buy back your home.  Otherwise, the house is sold to satisfy the lender, and your heirs receive the balance left over.   In some cases, if your home increases in value over time, you will not lose the equity in your home.

If you outlive the value of your home, your heirs will get nothing from the home, unless they simply want to buy it back, but they will not assume any debt either.  The Federal Government absorbs the difference, so you never have to worry about being forced to leave home in poverty.

In short, a Texas reverse mortgage for senior citizens is a weighty decision.  So much so, if they qualify, seniors are required to seek financial counseling to discuss all the pros and cons, in order to make a well-informed choice. In most cases, your heirs will not be concerned about what will be left to them after you are gone.  Instead, they will hope that the loan will help you live more comfortably and productively in your final years.